India has put steel into its carbon market. The targets make it cheap to stay dirty

India's iron and steel sector has formally entered the Carbon Credit Trading Scheme. Draft emission-intensity targets covering 255 units were notified in the Gazette of India, bringing the world's second-largest steel producer into the carbon market from the 2026-27 financial year. It is the largest sector yet covered by the scheme, and it accounts for 10 to 12 per cent of the country's total CO2 emissions.

The numbers in those targets are the story. NOT SCRIPTED worked through them against the sector's own intensity record and against the arithmetic of the CCTS design, and the conclusion is uncomfortable rather than triumphant. The scheme does bring a large emitter under a compliance obligation. What it does not do is make the obligation bite.

1. 1.255 units covered by the notified draft targets.
2. 2.358.6 million tonnes of CO2 equivalent — the combined baseline emissions of those units.
3. 3.2.54 tonnes of CO2 per tonne of crude steel — India's average intensity in 2023-24.
4. 4.1.9 tonnes of CO2 per tonne — the global average intensity.
5. 5.2.2 tonnes of CO2 per tonne — the Ministry of Steel's goal for 2030.
6. 6.151 million tonnes — approximate Indian crude steel production in 2024-25.

Reading the intensity gap

Because CCTS is an emission-intensity market, the obligation is per tonne of output rather than an absolute cap. A unit can therefore grow and still comply, provided each additional tonne is less carbon-intensive than the last. That design is defensible for a sector still adding capacity. It also means the single most useful comparison for a reader is the distance between where Indian steel sits and where the world's average sits.

That distance is 0.64 tonnes of CO2 per tonne of steel — roughly a third above the global average. Against that, a median required reduction in the region of 5.5 per cent is a marginal-efficiency exercise: better furnace yields, more scrap, modest process optimisation. It does not require the technology shift that would close a gap of that size, which is replacing blast-furnace routes with electric arc furnace capacity at scale.

• Required reductions across the largest steel and cement companies under the notified scheme are in the region of 2 to 5 per cent for 2026-27, per Climate Risk Horizons' review.
• The same review found the targets so low as to be readily achievable, making compliance through incremental improvement easy rather than transformational.
• The Centre re-issued a draft notification amending the Greenhouse Gas Emissions Intensity Target Rules, 2025 to bring steel into the scheme.
• Earlier draft targets for the sector were released in June 2026; the notified figures recalibrate those baselines.

None of this makes the notification useless. Building a compliance infrastructure that covers 255 units, an industry with historically thin emissions reporting, is real work and a necessary precondition for anything harsher later. The problem is that the first set of numbers sets a precedent about how much decarbonisation the scheme will buy per rupee of compliance cost, and the first set is the one industry groups will plan against.

A Bengaluru-based think tank, Climate Risk Horizons, put the sharper version in its review of the steel, cement and aluminium targets: low ambition makes it easy for emitters to pay to pollute instead of driving transformational change. That is the correct characterisation of an intensity market whose required reduction is comfortably inside the range of incremental improvement. The scheme's usefulness from here depends on whether the second and third rounds of targets are set close enough to the world's average intensity to require new plants rather than better ones.